US Charges Three Individuals in 'Evolved Apes' NFT Rug Pull Scam

Evolved Apes was a collection of 10,000 unique NFTs that promised buyers a video game, which never materialized.

Three individuals have been charged by the United States Attorney’s Office for the Southern District of New York in connection with the 2021 “Evolved Apes” NFT rug pull scam. Mohamed-Amin Atcha, Mohamed Rilaz Waleedh, and Daood Hassan face wire fraud and money laundering charges.

The Evolved Apes collection consisted of 10,000 unique NFTs. Buyers were promised a video game, but it never materialized. A week after the launch, the anonymous developer known as “Evil Ape” disappeared with 798 Ethereum (ETH), which was valued at $2.7 million at the time.

According to U.S. Attorney Damian Williams, the defendants drove up the price of digital artwork by making false promises about developing a video game and then allegedly taking investor funds, never developing the game, and pocketing the proceeds. Despite the novelty of digital art, the fundamental rule against making false promises for money still applies.

In the crypto world, this type of scam is known as a “rug pull.” Developers raise funds, typically through token or NFT sales, and then, after accumulating sufficient assets, they abruptly shut down the project and vanish with the money.

De.Fi’s Rekt database indicates that crypto bad actors have scammed over $79.7 billion since 2011. The largest rugpull listed is South African digital assets investment fund Africrypt, which disappeared with 69,000 Bitcoin (BTC), valued at nearly $4.8 billion in 2021.

This report follows a recent incident where a cryptocurrency trader lost $69 million in an advanced “address poisoning” scam. In this type of scam, bad actors create fake accounts that closely resemble the victim’s online crypto address and send small amounts, hoping the victim will later accidentally send money to the fake address.

Cryptocurrency-related scams, such as “pig butchering” scams, are becoming increasingly prevalent and costly for investors. At the end of last year, United States authorities were able to recover about $500,000 worth of assets lost to pig butchering scams.

Furthermore, in mid-March, Massachusetts prosecutors took steps to return some $2.3 million in digital assets, seized from fraudsters, to victims of a pig-butchering scam.